Sweeney v. Sweeney

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-1588-03.

The opinion of the court was delivered by: Coleman, R. B., J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued telephonically October 16, 2008

Before Judges R. B. Coleman, Sabatino and Simonelli.

Appellant, RBC Dain Rauscher, Inc. (RBC), appeals from two orders dated October 12, 2007, entered by the Family Part on cross-motions filed by the parties. The orders (a) denied with prejudice RBC's motion to intervene and stay arbitration, (b) granted the cross-motion of plaintiff Robinlynn Sweeney to compel arbitration and (c) referred the matter for NASD arbitration. The parties agreed to stay arbitration pending a decision by this court. We affirm.

On September 21, 1991, plaintiff Robinlynn Sweeney and defendant Robert Sweeney were married. In 1999, Ms. Sweeney sold for $90,000 and $465,000, respectively, a small business and a small office building she had purchased prior to the marriage and kept as separate property. Ms. Sweeney turned over those sale proceeds to RBC and directed RBC to open accounts with those monies in her name only. In connection with that arrangement, she signed a Gibraltar Securities Co. Margin Agreement which states in relevant part:

The undersigned agrees, and by carrying an account for the undersigned you agree, all controversies which may arise between us concerning any transaction or construction, performance or breach of this or any agreement between us, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration.

Gibraltar Securities Co., later merged with Tucker Anthony Co., and subsequently with RBC. Mr. Sweeney was a broker at RBC, and he became the broker for Ms. Sweeney's account. He was already the broker for the couple's joint account and for two accounts held by RBC on behalf of the couple's minor children.

In April 2004, Robert and Robinlynn Sweeney entered into a Property Settlement Agreement (PSA) that was incorporated into their Dual Final Judgment of Divorce filed April 29, 2004. The PSA does not mention any of the parties' brokerage accounts, but it contains a standard mutual release clause in which the parties give up any and all claims that each might have against the other by reason of any matter. The PSA also recites each party's agreement not to "annoy, molest or otherwise interfere with the other party, nor with the peace and comfort of the other, nor with the person or business of the other."

On March 14, 2006, almost two years after the divorce, Ms. Sweeney filed with NASD (now FINRA) a Statement of Claim for Securities Arbitration against RBC, alleging, among other things, mismanagement of her accounts, breach of contract, breach of fiduciary duty and breach of the duty to supervise. In response, RBC filed in the Family Part of the Chancery Division in Morris County a post-judgment motion to intervene in the divorce action and to stay arbitration. RBC contended that as a result of Ms. Sweeney's Judgment of Divorce, her arbitration claims were barred by res judicata and by the entire controversy doctrine. RBC also claimed that it is a third-party beneficiary of the Sweeneys' Judgment of Divorce and that, under the doctrine of respondeat superior, the release of Mr. Sweeney released RBC. Ms. Sweeney filed a notice of cross-motion to compel arbitration.

At the motion hearing, the court recognized that the threshold question it had to address was whether Ms. Sweeney's claims were arbitrable. The court concluded that it was the court's role to decide the arbitrability of the issues. Accordingly, it decided that, pursuant to the Federal Arbitration Act at 9 U.S.C.A. 1-16 and controlling case law, Ms. Sweeney's claims against RBC were within the scope of the arbitration agreement and that the numerous issues raised by RBC in its motion to stay arbitration "go to the merits of its defenses against the claim." The court observed that there was no "reason why arbitrators could not entertain and decide [these] defenses." This appeal by RBC ensued.

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